Posts in "Shipping"

March 25, 2015

Billionaire investor Wilbur Ross, right, seen here with James B. Lee of JP Morgan Chase at an event last year, warned of over-capacity in the shipping industry. (Photo by Larry Busacca/Getty Images for The New York Times)

A slowdown in demand, especially from China, for iron ore, coal, cement, and other commodities means less need for dry bulk goods vessels to carry those commodities.

The Baltic Dry Index, which measures the rates for chartering ships that transport commodities, has been hovering near its 30-year low.

The slump has led billionaire investor Wilbur Ross to warn this week that “shipping’s structural problems can only be solved by massive consolidation” in the shipping industry.

Ross is renowned for making his fortune by buying distressed assets when others are too pessimistic to take the plunge.

His comments were reported in the Financial Times which added that “most vessels carrying coal, iron ore and other dry commodities are earning less than their operating costs in one of the worst ever markets for such vessels.”

March 10, 2015

We hear a lot about congestion on the rails as oil and other products move across the county. But there’s heavy traffic on waterways as well, as an accident Monday in the Houston Ship Channel indicated.

A Venezuela-bound tanker spilled the gasoline additive MTBE into the Channel, one of the nation’s crucial transportation choke points, after hitting another vessel, shutting down part of the waterway.

In a recent report, the Center for Strategic and International Studies said increased traffic of oil and perhaps liquefied natural gas exports in the coming years may result in “an (over)taxing of Gulf Coast pipelines, ports, storage facilities, ship channels, and ships themselves – and that does not even take into consideration any delays caused by accidents or storms….”

Back on dry land, the League of American Bicyclists is starting its 15th annual summit in Washington, bringing together advocates from around the nation to urge Congress to keep funding bike trails in this year’s surface transportation bill and to appreciate the value of bicycles in transportation planning.

The League has a lobby day scheduled for Thursday at the Capitol and a “Jim Oberstar Memorial Ride” set for Friday. Oberstar was a dedicated bicyclist and the chairman of the House Transportation and Infrastructure Committee from 2007 to 2011. He died last May.

February 27, 2015

A container ship sits docked at the Port of Oakland on Feb. 17, 2015 in Oakland, California. (Photo by Justin Sullivan/Getty Images)

This week the 29 West Coast ports began their recovery from a damaging nine-month labor dispute that led to work slowdowns. Container ships lined up off shore as they waited to dock and unload their containers.

We looked at the need for the ports to regain the trust – and patronage—of shippers, some of whom have diverted ships to East Coast, Mexican, and Canadian ports.

The theme of protectionism ran through a couple of stories this week, with our look at the Buy America requirement for infrastructure projects – even for components as small of four-inch steel valves on a the Kosciuszko Bridge project in New York City.

(Kosciuszko, by the way, was a Polish military officer and engineer who designed fortifications along the Hudson River and helped the colonies win their independence.)

Tucked in President Obama’s $94.7 billion Fiscal Year 2016 budget request for the Department of Transportation is $3 million for a ship berthed in Baltimore which has carried neither cargo nor passengers since 1970.

The Maritime Administration is seeking the money for maintenance and “radiological protection” for the nuclear-powered merchant ship Savannah, a National Historic Landmark and an artifact of the Eisenhower Era.

To anyone concerned about fossil fuel pollution, a merchant fleet with no carbon dioxide or sulfur emissions might seem appealing.

February 25, 2015

The struggle to preserve the U.S. merchant shipping fleet played out on three fronts Wednesday at a hearing of the House Transportation and Infrastructure subcommittee on Coast Guard and Maritime Transportation.

First: while the drawdown of U.S. troops in Iraq and Afghanistan may be welcome news for stressed-out military families, it’s not good news for the merchant fleet.

Paul Jaenichen, the head of the Maritime Administration, told the subcommittee that the declining volume of Defense Department cargo due to the withdrawal of most U.S. forces from Afghanistan and Iraq “coupled with a more than 80 percent reduction in personnel and military bases overseas since 1990” is hurting the U.S. merchant fleet.

February 23, 2015

Ships wait to be loaded at the Port of Los Angeles on Feb. 13, 2015. (Photo: Mark Ralston/AFP/Getty Images)

Will that shipment arrive in time? That’s a big question in the aftermath of Friday’s announcement from the Pacific Maritime Association and the International Longshore and Warehouse Union that they’d come to a tentative agreement on a five-year contract.

How soon can U.S. exporters, and the dockyard workers, terminal operators, railroads, and truckers upon whom they rely, convince customers in Korea, China, and elsewhere that U.S. products will get there as promised?

All sides need to “help restore confidence that the West Coast and the United States are open for business,” said National Association of Manufacturers president Jay Timmons.

February 13, 2015

An orchard in Washington, America’s largest apple producing state (Photo by Jeff T. Green/Getty Images)

This week we spent much time considering the troubled state of West Coast ports, now crippled by a struggle between port operators and the union representing dock workers.

There’s a long list of American-grown and -raised products that aren’t getting to Pacific Rim customers in a timely fashion, due to the congestion and work slowdown at ports from Seattle to Los Angeles.

February 12, 2015

Boxes of apples are stacked to the ceiling in a warehouse in Yakima, Wash., fruit that should be headed to markets in China for next week’s New Year celebrations, but won’t be going due the West Coast ports dispute.

That image from Rep. Dan Newhouse, R- Wash., was one of the many examples cited Thursday by House members of both parties, and from Ohio to American Samoa, as they pleaded with the International Longshore and Warehouse Union and the Pacific Maritime Association to come to terms and end their nine-month contract battle.

“I’ve heard of [potato] producers facing bankruptcy because their products are en route and stuck, and obviously that’s not a good situation to be in” when you export a perishable product, Newhouse said. “We’re missing out on tremendous market opportunities, for instance the Chinese New Year is one of the biggest windows of sales that we have for Washington apples.”

February 11, 2015

Count the Port of Portland as another casualty of labor-management strife at West Coast ports.

On Tuesday Hanjin, Korea’s largest shipping company, announced that it was ending service to Portland, which in 2013 ranked 14th among U.S. ports in the volume of exports.

On Twitter, Port of Portland executive director Bill Wyatt said it was “a very sad day in Portland.” He expressed both “our gratitude to Hanjin for over two decades of service to our community” and “our sadness at an absolutely broken business model in west coast container terminals.”

February 10, 2015

An increasing number of disenchanted Korean, Japanese, and Chinese buyers of U.S. pork are now looking elsewhere, Cargill vice president for international sales Norman Bessac told a Senate Commerce subcommittee Tuesday.

Cargill is a Wayzata, Minn.-based agricultural processor with $135 billion in sales last year.

Asian buyers are cancelling U.S. orders and shifting to suppliers in Chile, Australia and the European Union, Bessac said.

“Any time you disappoint a customer, it takes time to build trust back,” Bessac told subcommittee chairwoman Sen. Deb Fischer, R- Neb. “There is no doubt that we’ve disappointed our customer base, primarily in Japan, Korea and China over the last couple of months and that will take some time to rebuild trust.”

California’ senators are warning that their state’s economy may already have suffered long-term damage from the nine-month contract dispute between port terminal operators and the union which represents 20,000 dock workers.

Democratic Sens.Dianne Feinstein and Barbara Boxerof California wrote in a joint letter to Robert McEllrath, president of the International Longshore and Warehouse Union (ILWU), and James McKenna, the president of the Pacific Maritime Association, both based in San Francisco, that ships “have been diverted from California ports in search of more efficient offloading sites. Long term damage to the competitiveness of California ports may have already occurred. These are terrible circumstances.”

Feinstein and Boxer cited anecdotes illustrating the effects on their state:

the citrus industry is entering its peak February-March exporting season, but deliveries have been delayed for three to four weeks;

“a large shipment of California rice destined for Asia is likely to be cancelled, costing farmers in our state tens of millions of dollars in income;”

the supply chains of California-based retailers have been disrupted, forcing them “to rely more on expensive air freight services to ensure their products reach American consumers.”

Will there still be a demand for U.S. coal in places such as China if state and federal regulators finally decide to allow exports from two proposed terminals in the Pacific Northwest?

Whether the administration of Democratic Gov. Jay Inslee of Washington allows coal to be shipped from the proposed terminals in his state is a question that will take years to answer.

The state is taking into account the environmental effects of the burning of coal in China and other foreign countries if it’s exported from Washington state terminals.

Meanwhile, the Army Corps of Engineers is pondering a request from the Lummi Indian nation that it reject a permit application for the proposed coal terminal at Cherry Point, Wash., about 13 miles from the U.S.-Canada border.

February 9, 2015

With the labor-management struggle at the Pacific Coast ports reaching a critical point in the next week or so, it’s good timing for Congress to focus on the efficiency of U.S. ports.

Tuesday

There’s a Senate hearing on the U.S. supply chain, particularly the importance of ports. Holding the hearing is the Commerce Committee’s Surface Transportation and Merchant Marine Infrastructure, Safety, and Security subcommittee.

Also Tuesday, the free-market oriented Cato Institute will convene a panel discussion on the regulatory framework that should govern on-demand car services such as Uber and Lyft.

(For some reason these have been labeled as “car-sharing services” which doesn’t really describe what they are or what they do.)

On the Cato program are the Competitive Enterprise Institute’s Marc Scribner and Dean Baker of the Center for Economic and Policy Research.

With the Washington, D.C. forecast for Tuesday being snow showers and temperatures falling into the 20s, perhaps you’d rather be in sunny Florida. If so, you could head to the Stifel Nicolaus Transportation and Logistics Conference in Key Biscayne.

Among the speakers are Rob Knight, chief financial officer of the Union Pacific railroad, Donald Seale, executive vice president of Norfolk Southern, and YRC Worldwide chief executive officer James Welch. YRC is a holding company for a portfolio of less-than-truckload companies.

Wednesday

Another sunny day in Florida, another transportation conference as Union Pacific’s Rob Knight and other industry leaders speak at the BB&T Capital Markets 30th Annual Transportation Services Conference in Miami.

Back in Washington, Transportation Secretary Anthony Foxx testifies on the FY 20167 budget request before the House Transportation and Infrastructure Committee.

Also, two hearings focus on the Army Corps of Engineers and its work in dredging harbors and improving the nation’s waterways.

Some members of Congress are voicing their unhappiness that President Obama’s Fiscal Year 2016 budget proposal would cut planned spending from the Harbor Maintenance Trust Fund.

Wednesday morning, the House Appropriations subcommittee on Energy and Water Development, and Related Agencies hears from Jo-Ellen Darcy, the Assistant Secretary of the Army for Civil Works, and Gen. Thomas Bostick, the commanding general and chief of the Army Corps of Engineers.

Those same witnesses are back in the afternoon before the Senate Appropriations Energy and Water Development Subcommittee.

Friday

The House Oversight and Government Reform Committee will hold a hearing on the safety of the Washington, D.C. Metro subway system.

On Jan. 12, a Metro passenger died after two trains were engulfed in heavy smoke at the L’Enfant Plaza stop. The NTSB is investigating the incident.

Running through our stories this week was the theme of struggle, the competitive fray, the battle between contending forces.

Since we’re in Washington, D.C., of course there’s the inevitable struggle between the executive and legislative branches over political power and the interpretation of law.

Rep.Janice Hahn, D-Calif., told us that in the Water Resources Reform and Development Act (WRRDA), enacted just last year, “We laid out a very reasonable, common-sense goal of increasing what we’re spending every year” on harbor dredging and port maintenance.

But Hahn said President Obama’s proposed Fiscal Year 2016 budget “decreases what we’re spending every year and in fact in 2025 is only proposing that 30 percent of all the money we collect would be returned to the ports.”

And we described another legislative vs. executive struggle over a new tank car standard which the Pipeline and Hazardous Materials Safety Administration has yet to deliver, creating regulatory uncertainty among railroads, shippers, and car manufacturers.

A sardonic Rep. Peter DeFazio, D- Ore., said at a House hearing Tuesday the rule is “lost somewhere in the bowels of the administration between the agency and the trolls over at the Office of Management and Budget who will further delay the ruling.”

The U.S. air carriers are asking the Obama administration to consider re-negotiating those deals, alleging that Gulf air carriers are government subsidized.

Another form of struggle is the eternal one of labor versus management. We saw it this week in the West Coast port managers’ standoff with the International Longshore & Warehouse Union over a new contract.

Pacific Maritime Association President Jim McKenna as he warned that ports from Los Angeles to Seattle were at “the brink of collapse” due to union work slowdowns.

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About The Container

The Container covers the transportation community in Washington.

Tom Curry (@TCurry_Himself) writes for The Container. He has been a national affairs reporter and editor for nearly two decades, having covered elections, Supreme Court nominations, fiscal policy and the health care debate.